The Banking and Corporate Finance Training Specialist

Basic Financial Modelling in Excel

A Two Day Programme

This course is presented in London on:

DATES TBD

This course can also be presented in-house for your company

or via live on-line webinar

http://redcliffetraining.com enquiries@redcliffetraining.co.uk

+44 (0)20 7387 4484

Course Overview

The course is designed to support accountants and analysts working in corporate and SME businesses in creating financial models on a consistent and focussed basis. Some previous use of Excel is assumed, but delegates will not need an advanced knowledge.

Day One

Introduction & Course Objectives

Overall Model Structure & Design

Best financial modelling practice Overall structure of the model Logic flow within the model

Separation of inputs, calculations and outputs Defining desired outputs

Setting-up required inputs Use of switches to allow option selection Use of flags to control timing factors

Set-up for flexibility Consistency in the model

Accommodating multiple options Building assumptions off term sheets or other external inputs Using the assumptions sheets as a sign-off document

Restricting ranges of inputs and validation criteria Version control

Use of the corkscrew technique Tracking changes Exercise – creating a cash flow model with an assumptions / input sheet with

built-in flexibility

Modelling Techniques for Forecasting Translating assumptions & inputs into a model forecast Correct matching of units

Treatment of fixed and variable costs Modelling pricing & revenue assumptions

Use of lookup functions to change expenditure timings Building in sensitivities into the model

Exercise – add detailed cost calculations, lookup functions and sensitivities into the previous cash flow model

Inflation / Escalation Factors Creating inflation indices Controlling start time of inflationary pattern

Applying multiple rates to different cost & revenue items Varying inflation rates over life of the model

Using exponential formulas for other forecasting purposes

Exercise – model multiple, variable rates and analyse a separate set of actual rates to compare to forecast

Course Objectives

Course Content

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Day Two

Modelling Taxes Differences between P&L and tax treatment for costs & revenues Allowing for deductibility and non-deductibility

Capital allowances vs depreciation Modelling tax losses and their effect

Example - review of an example of tax modelling for an investment project Exercise – add tax calculations into the previous cash flow model

Dealing with Circular References

Circularity and consequences When does circularity most frequently occur? Solutions to circularity – advantages and disadvantages of each

Example – demonstrate various methods to overcome circular references

Cash Flow Modelling

Principles of discounting of cash flows Setting the discount rate Modelling for:

Timing of debt and equity funding Interest costs, capitalised interest

Debt repayments Debt refinancing Dividends and other equity returns

NPV, IRR and other DCF measures

Exercise: add debt costs, interest payments, repayment profiles and dividends to the previous cash flow model, and discount the cash flows at an appropriate rate

Comparing a Model to Previous Versions of the Model

Separate runs and variation of inputs Comparison of actuals to forecast Comparing results of different versions of same model

Reviewing future implications of variances Example – from different versions of a modeled forecast, calculate variances and

review future assumptions

Sensitivity Analysis Stress-testing the model Varying inputs to assess effect on results

Use of built-in sensitivity inputs Use of goal seek & solver

Version control to allow comparison of outputs Use of Excel tools to support sensitivity analysis:

data tables

scenario manager

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watch window function

scenario tables Exercise – from a given model of cash flows, P&L and balance sheet, calculate

effect of varying inputs to a given degree, and stress-test model to break-even.

Wrap-Up Overall review Key points to re-iterate

Brief introduction to further exercises & reading Final questions and issues to discuss

Aims

The principal aim of the course is enable participants to prepare logical and easy-to-use financial models in Excel to support transactions, forecasts and planning for ongoing

business streams. The course will review best practice in model structures, calculations and logic, and using tools to highlight areas of risk, particularly in sensitivity analysis.

Methodology The learning methods used are practical, as practice of newly-learned techniques enables

a deeper and more effective building of skills. Each section will be covered briefly as a module in a traditional class style, but the real learning experience will be found in the exercises within each module. The trainer will support delegates during the exercises,

answering questions and providing one-on-one help where needed. Suggested solutions to each exercise will be provided and discussed, and participants will be encouraged to

review their work independently. Participants will be required to bring a laptop to the course.

What Redcliffe’s Clients are saying about the course:

“Wide range of Content”

-- IFC

“The examples were good”

-- Investment Banking Analyst, Oppenheimer

Course Overview

http://redcliffetraining.com enquiries@redcliffetraining.co.uk

+44 (0)20 7387 4484

09:30-17:00

London

Standard Price: £1100 + VAT Membership Price: £880 + VAT

In-House Training

Delivering this course in-house for a number of participants could be very cost effective.

The venue and timing can be agreed to suit the client, as well as the selection of the trainer and the

precise contents of the seminar.

Tailored Learning

All of our training courses can be tailored to suit your company’s exact training needs.

We will work closely with you to help develop a training programme with content that is unique for your

organisation.

Please email us on enquiries@redcliffetraining.co.uk for more information

E-Learning This course can also be presented as a bespoke e-learning programme created by you to fit your exact

requirements.